Macroeconomic costs and benefits for the EU as a first mover in climate change mitigation: a computable general equilibrium analysis

Professor Pantelis Capros, National Technical University of Athens

The paper uses the GEM-E3 global computable general equilibrium model to analyse the costs and benefits for the EU as a first mover in a global effort for reducing greenhouse gas emissions until 2050. The model includes induced technology progress effects and global trade of new clean energy technologies and quantified various global energy and economy projections until 2050. The main issue addressed is whether the EU could get first-mover advantages from developing the new technologies in a context of early unilateral action for emission reduction, as planned for by the EU Roadmap to 2050, assuming that the rest of the world undertake such actions later. First mover advantage is meant as the possible trade and growth benefits stemming from technological leadership in technologies required to implement transition to a low carbon emitting economy. The EU energy scenarios corresponding to emission reduction are based on PRIMES energy model projections which is used linked with the GEM-E3 general equilbrium model. The robustness of the  results is analysed through a series of sensitivity analysis model runs.